Don’t Miss the Chance to Buy GILD at a 20% Discount

by Sam Collins | April 15, 2014 1:38 am

Gilead Sciences (GILD[1]) — This has been a favorite biotech stock of mine since November 2012[2], when I recommended it near $37.50. I have covered it numerous times since then, most recently on Feb. 12[3].

On March 28, S&P repeated its “strong buy” rating and $116 price target. In the past, it has said the company’s hepatitis C drug Sovaldi is “poised to achieve a leading market position, complementing its market-leading HIV franchise.” Congress recently asked Gilead to justify Sovaldi’s cost, but S&P said it believes the challenge will have little impact on the new drug’s pricing even though GILD will likely make some price concessions to Medicaid.

The congressional challenge and general market sell-off have resulted in shares plunging from a high of $84.88 in late February to a low of $63.50 on Friday. Monday’s reversal resulted in a buy signal from my proprietary indicator, the Collins-Bollinger Reversal (CBR). The stock is currently trading in a bear channel with resistance at its 200-day moving average at $69.10.

This outstanding biotech stock has fallen more than 20% from its high, and investors should take at least a partial position now. The trading objective is $77.